U.S. Stocks Cap Longest Stretch of Advances Since 2004

U.S. stocks rose for the week,
capping the longest stretch of daily gains since 2004, amid
better-than-estimated corporate earnings and economic data as
lawmakers voted to temporarily suspend the federal debt limit.

Netflix Inc. (NFLX) surged 71 percent after beating its forecast
for subscriber growth and posting an unexpected profit.
International Business Machines Corp. rose 5.4 percent after
forecasting earnings that topped estimates. 3M Co., the maker of
Scotch tape, added 1.9 percent as sales growth in Asia,
excluding Japan, rose the most in about two years. Apple Inc. (AAPL)
fell 12 percent, losing the title of most valuable company to
Exxon Mobil Corp. (XOM) amid the slowest profit growth in a decade.

The Standard & Poor’s 500 Index rose 1.1 percent for the
week to 1,502.96. It has added 2.2 percent in eight days, the
longest rally since November 2004. (SPX) The Dow Jones Industrial
Average gained 246.28 points, or 1.8 percent, to 13,895.98. Both
measures are trading at the highest levels since 2007.

“People are jumping on the bandwagon,” said Wayne Lin, a
fund manager at Baltimore-based Legg Mason Inc. His firm
oversees $648 billion. “The earnings are better. Economic
figures are trending the right way. The legislators and the
administration have gotten the message that they need to work
together and investors are seeing that as a positive sign.”

Stocks rose as earnings at 76 percent of the S&P 500
companies which reported results so far have topped analysts’
estimates. Claims for jobless benefits unexpectedly dropped to a
five-year low. The index of American leading indicators rose by
the most in three months. The U.S. House voted to temporarily
suspend the nation’s borrowing limit, removing the debt ceiling
for now as a tool for seeking deeper spending cuts.

January Rally

The S&P 500 is poised for a third straight month of gains
after advancing 5.4 percent so far in January. Energy producers
and health-care companies have led the rally, adding at least
7.2 percent. The benchmark gauge is trading at 14.9 times
reported earnings, below the average since 1954 of 16.5.

“The trend favors the march of the bulls,” said Brian Jacobsen, who helps oversee $212 billion as chief portfolio
strategist at Wells Fargo Advantage Funds in Menomonee Falls,
Wisconsin. “If we continue to see economic improvement and
financial conditions thaw, we’ll see markets marching higher.”

Measures of consumer discretionary and financial shares
rose the most among 10 S&P 500 groups for the week, gaining more
than 1.8 percent. The Dow Jones Transportation Average jumped
3.1 percent to a record. The Chicago Board Options Exchange
Volatility Index, which measures the cost of using options as
insurance against declines in the S&P 500, rose 3.5 percent to
12.89, after falling to the lowest level since 2007.

Defying Analysts

Netflix surged 71 percent, the most ever, to $169.56. The
company, which faces increased competition from rivals such as
Coinstar Inc.’s Redbox unit, posted fourth-quarter net income of
$7.9 million, defying analysts’ forecasts of a loss. It also
signed more than 2 million new U.S. Internet subscribers,
bringing the total to 27.2 million in the U.S.

Billionaire Carl Icahn, with a 10 percent stake, added to
the enthusiasm when he predicted further gains for the stock
after the Jan. 23 earnings report. While down from the July 2011
record high of $298.73, Netflix has more than doubled since the
investor disclosed his holdings on Oct. 31.

IBM climbed 5.4 percent to $204.97. Chief Executive Officer
Ginni Rometty is shifting away from hardware to more profitable
businesses such as cloud computing, a service that provides
remote access to information. The company is also looking for
more growth from developing markets such as Africa to help meet
its target of $20 in earnings a share by 2015.

Google Jumps

Google Inc. added 7 percent to $753.67. The owner of the
world’s largest search engine reported profit that topped
analysts’ estimates as advertisers boosted spending to reach
consumers during the holiday season.

3M increased 1.9 percent to $100.59. Sales from existing
business rose 10 percent in the Asia-Pacific region, driven by a
16 percent gain in China, Chief Financial Officer David Meline
said. Including Japan, sales in the region rose 5.8 percent,
compared with a decline of 0.1 percent in the third quarter.

AT&T Inc. rose 1.7 percent to $34.02. The largest U.S.
phone company posted a narrower fourth-quarter loss after
customers bought a record number of discounted smartphones,
including 8.6 million of Apple’s iPhones.

McDonald’s Corp. (MCD) added 1.6 percent to $93.72. The largest
restaurant chain by sales said fourth-quarter profit rose 1.4
percent as its dollar menu and McRib sandwich helped U.S. sales.

Starbucks Corp. climbed 3.7 percent to $56.81. The largest
coffee-shop operator said profit rose 13 percent in its fiscal
first quarter as sales increased in the Americas and fell in
Europe, the Middle East and Africa.

Apple Tumbles

Technology shares had the only decline in the S&P 500 among
10 industries, dropping 0.5 percent.

Apple sank 12 percent, the most since 2008, to $439.88. At
least 20 analysts lowered their price targets after Apple on
Jan. 23 posted its quarterly results. The report underscored the
rising costs of product overhauls amid competition from Samsung
Electronics Co. in the saturating smartphone market.

Apple surrendered the title of the world’s most valuable
company to Exxon Mobil Corp. after concern over slowing growth
drove the shares down 17 percent this year for the biggest loss
in the S&P 500. The decline reduced its market capitalization to
$413 billion, below Exxon’s $418 billion.

Coach Inc. (COH) plunged 17 percent, the most since 2009, to
$51.21. The largest U.S. luxury handbag maker reported fiscal
second-quarter profit that trailed analysts’ estimates, hurt by
lower demand in North America.

Cliffs Natural Resources Inc. decreased 4.1 percent to
$35.71. The biggest U.S. iron-ore producer said it will take a
$1 billion writedown for the fourth quarter related to its 2011
acquisition of Consolidated Thompson Iron Mines Ltd.